* South32 ( SHTLF ) to sell most aluminium assets to Alcoa Corp ( AA )

* Deal for enterprise value of up to $5.6 bln

* South32 ( SHTLF ) to return around $500 mln as special dividend post

deal completion

* Shares in South32 ( SHTLF ) jump as much as 10% in early trading

By Melanie Burton and Shivangi Lahiri

July 1 (Reuters) - Australia's South32 ( SHTLF ) said on

Wednesday it has agreed to sell most of its aluminium assets to

Alcoa ( AA ) for an implied enterprise value of up to $5.6

billion, as the diversified miner streamlines its business to

focus on copper under a new CEO.

For Alcoa ( AA ), the deal expands access to upstream assets

including bauxite, alumina and aluminium assets across Brazil,

South Africa, and Western Australia where it can harness its

proximity to South32 ( SHTLF ), given both operate alumina refineries

within a few hundred kilometres of each other.

For South32 ( SHTLF ), the deal will free up capital and focus for the

company's newly minted CEO Matthew Daley to chase higher-margin

growth assets as it expands copper production in Chile and base

metals in the U.S.

"This deal shows South32 ( SHTLF ) is getting much more focused on

base metals," said portfolio manager Andy Forster of Argo

Investments in Sydney, which holds South32 ( SHTLF ) shares. "It should be

taken well by the markets today."

Shares in South32 ( SHTLF ) jumped as much as 10% in early Australian

trading.

The U.S.-based aluminium producer will assume about $1.2

billion in cleanup and site-closure liabilities tied to the

assets, South32 ( SHTLF ) said.

"Our business will be simpler with a portfolio of

higher-margin upstream operations, reduced complexity and

greater resilience," said Daley, who took over as South32's ( SHTLF )

chief executive and managing director on Wednesday.

Daley said the sale would help deliver an expected $125

million in annual overhead cost savings as new support

structures are put in place.

The transaction is expected to complete in the second half

of 2027, after which the Australian miner intends to return

around $500 million to shareholders as a fully franked special

dividend.

In a separate statement, Alcoa ( AA ) said the cash-and-stock deal

is expected to allow it to cut costs by some $900 million in net

present value.

"Greater scale and integration are expected to reduce

complexity, lower costs, and improve competitiveness while

strengthening supply chain resilience across key jurisdictions,"

Alcoa ( AA ) added.

As well as acquiring South32's ( SHTLF ) stakes in Australia's Worsley

Alumina, Alcoa ( AA ) will also acquire South Africa's Hillside

Aluminium, Brazil's MRN bauxite mine, its Brazil alumina

refinery and aluminium smelter.

The transaction excludes South32's ( SHTLF ) Mozal aluminium smelter in

Mozambique, which was placed on care and maintenance in March as

the firm failed to secure a sufficient and affordable power

supply.

In a separate statement, South32 ( SHTLF ) said Chile's Sierra Gorda

joint venture approved a fourth grinding line expansion to lift

processing capacity by about 25%, with growth capex expected at

around $725 million between 2027 and 2030.

This will significantly increase copper production and lower

operating unit costs, Daley said.